Buy.com has been charging sales tax for Indiana residents (a few other states as well) since last summer, but has not done its math correctly.

Specifically, when you place an order with Buy in those states, they compute the tax not only on the merchandise, but also on the shipping charge (now even higher than before).

I have tried to write their home office comptroller, but have had very little success even in getting a response. I can only surmise that this is an extra way to generate revenue without raising prices.

If you've been following Buy's pricing of late, you get the picture. With their higher prices, shipping and incorrect sales tax computations, I'm not sure they will have many customers in the future. I used to place the bulk of my orders with Buy, but their current practices force me to purchase elsewhere.

All e-tailers are required, by law, to do that. Shipping is considered to be part of the merchandise, and, thus, must be taxed. Don't ask me why, but that is the law. Just another way for the gov't to get even more money from you.

EDIT:
From Buy's FAQ:
From Amazon's FAQ:
Unfortunately, I don't know the exact wording of the law that requires tax being charged on shipping, but maybe someone else can post that.

[Edited by scott27 on 02-17-01 at 11:22 PM]

I think it's because it's shipping & "handling", it's the latter they are charging tax on.

nemein is right. I believe California requires tax on the handling portion, but since they don't break it out into costs for each shipping and handling, they charge tax on the total (Columbia House does too and used to (and may still) actually give this explanation)

Before I contacted Buy.com about this issue, I called our State Dept. of Revenue and was told that sales tax was not to be collected on the shipping & handling portion of a sale.

My take on it based on what some of you have said, is that if California says to tax the "handling" portion, then go ahead and tax all of it.

For convenience sake, I'm guessing that Buy (and other e-tailers) just treat other states the same even if their statutes are different.

There is no federal law about that, an etailer has to conform to the laws of the individual states. Some states charge tax only on hard goods, other charge on services. It varies and it all depends on where you live and where the retailer's HQ is located.

For instance, in Oregon, there is no sales or service tax of any kind. An Oregon based etailer is not required to charge taxes of any kind, unless the state you are located in requires you to pay the tax, even though you are legally making a purchase in Oregon.

The following link may help....looks like they may be doing it right.

http://www.in.gov/dor/reference/lega...0000255lof.pdf